Sustainability reporting poses ‘greenwashing trap’ for mining, BDO warns
Mining companies are set to face the dual challenge of complying with the new climate reporting standards while avoiding the pitfalls of greenwashing, according to a sustainability reporting specialist.
Mining firms should start ensuring their sustainability information is accurate, reliable and verifiable and reflects their actual impacts and practices with the sustainability reporting legislation likely to be passed soon.
The bill to implement the new reporting, Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024, is before the Senate with Parliament to return next week.
BDO national leader of sustainability, Aletta Boshoff, said the new reporting, when legislated, will require companies to articulate their sustainability risks and opportunities in a thorough, efficient, and verifiable manner.
This will require mining firms to disclose financially significant sustainability risks and opportunities across short, medium, and long-term horizons, Boshoff said.
“The biggest challenge for these miners is addressing their own emissions whilst also enabling critical energy transition minerals.”
Mining firms in particular face a delicate balancing act.
“The mining industry faces unique challenges in balancing its role in society against environmental and social impacts.
“Companies must refrain from overstating their positive impacts while downplaying negative effects.”
She also stressed that while mandatory climate reporting only applies to larger entities, this does not exempt the need for small- to medium-sized companies to report accurate information.
“This is due to increasing pressure from larger customers and suppliers, who need to report their scope 3 greenhouse gas emissions and are demanding more transparency and accountability from their value chain partners," she said.
This could leave many small and mid-tier firms in a vulnerable position.
“Compliance with reporting standards demands significant financial, human, and technological resources”, she said.
“Smaller firms may struggle to allocate adequate resources for comprehensive reporting and are at heightened risk if they lack the skills and resources to meet and integrate these requirements into their business processes.”
Boshoff recommends these firms prioritise reporting on the most critical sustainability aspects such as safety, emissions, and community involvement.
“Misalignment between reported actions and actual practices can damage reputations, erode stakeholder trust, and expose companies to regulatory penalties.”
She warned firms that failing to comply with the new standards could expose mining firms to legal action, reputational damage, and loss of trust from investors, customers, and regulators.
ASIC has also continued to caution firms that greenwashing is at the top of its regulatory agenda.
ASIC has been actively enforcing greenwashing claims and, as of 2024, has issued 17 infringement notices totalling more than $230,000, Boshoff said.
“The Australian Competition and Consumer Commission (ACCC) is also actively cracking down on misleading environmental claims through an extensive 'internet sweep'," she said.
“Recent amendments to the Australian Consumer Law have also significantly raised financial penalties for greenwashing.”
Corporations guilty of making false and misleading sustainability or environmental claims face penalties exceeding $50,000,000 or three times the benefit gained from the deception or up to 30 per cent of the corporation's adjusted turnover during the breach period.
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